SPECIAL SECTION: 2019 OUTLOOK
SYNDICATION
Real Estate Syndications Gain Momentum in 2018 UNDERSTANDING THE PROCESS IS MORE IMPORTANT THAN EVER.
by Kathy Fettke
T
3 years and had already raised over $8 million for his latest multifamily project. He was just about to syndicate another one and asked if we could partner. When I asked a few basic questions about the pro forma, it became very clear that he was only using “blue sky” projections. He clearly has not looked at historical data to see that rents never rise forever, as nice as it looks on paper. He also hadn’t accounted for rising property taxes and interest rates, that would dramatically affect net operating income (NOI).
hese past few years, real estate media headlines have been filled
might not be a able to do on their own. As property values rise and the stock market gyrates, more and more people are looking at either syndicating them- selves, or investing in other syndica- tions. With so much money flowing, it’s become increasingly important to know what you’re doing so you don’t lose your money (or worse, someone else’s!) I have been to many events lately where I’ve met brand-new investors who are now syndicating deals. One man had only been investing in real estate for
with two words likely familiar to most investors: “syndication” and its cousin, “crowdfunding.” While syndications have been around for decades, crowdfunding is a more recent phenomenon, intro- duced by the Jumpstart Our Business Startups (JOBS) Act in 2012. Both syndications and crowdfunding are a way for companies to raise private money for their projects, while offering investors a way to passively participate in deals they
40 | think realty magazine :: december 2018
thinkrealty . com | 41
Made with FlippingBook Online newsletter